Relating microeconomic
efficiency with macro-level
productivity of the health care
sector in the EU Context
Akiko Maeda, Ph.D.
Lead Health Specialist
The World Bank
Europe and Central Asia Region
Presentation Outline
Overview
Defining “product” and
“productivity” in health system
Measurement tools and
performance standards
Critical role of health information
systems
Relevance in the EU Context
Relating microeconomic efficiency
with macroeconomic productivity in
the health sector:
Health care is a significant and growing
segment of the economy (7 to 14% of
GDP in industrialized countries)
Involves highly complex interactions
among inputs, outputs and outcomes
Health, Health System and Growth
Macroeconomic
Growth
Improved
Health
Outcomes
Health
System
Productivity
Percentage of GDP spent on Health, Seven
OECD Countries 1970-1998
14.0
Canada
France
Germany
Japan
Sweden
U.K.
USA
13.0
12.0
Percent of GDP
11.0
10.0
9.0
8.0
7.0
6.0
5.0
4.0
1970
1975
1980
1985
Year
1990
1995
Total Health Spending in Europe as % GDP,
1990-1999
11.0
Austria
Denmark
France
Germany
Greece
9.0
8.0
Italy
Netherlands
Portugal
Spain
7.0
6.0
Year
99
19
98
19
97
19
96
19
95
19
94
19
93
19
92
19
91
19
90
5.0
19
Percent GDP
10.0
Sweden
United Kingdom
Life Expectancy in Europe, 1990 - 1998
Life Expectancy at Birth, in Years
80.0
79.0
Austria
Finland
France
Germany
Netherlands
Portugal
Spain
Sweden
United Kingdom
78.0
77.0
76.0
75.0
74.0
73.0
1990
1992
1994
Year
1996
1998
OECD Health Spending & Health Outcomes,
1998
Total Health Total Health
Infant
Expenditure Expenditure,
%GDP
US$
UK
Japan
Sweden
Canada
France
Germany
US
6.7
7.6
8.4
9.5
9.6
10.6
13.6
1,607
2,283
2,146
1,828
2,358
2,769
4,178
Mortality
Rates
5.9
3.7
3.6
5.5
4.7
4.8
7.2
Health Outcomes and Health Spending
Health Expenditure as % GDP, 1997
14
USA
13
12
11
Germany
10
9
Canada
France
Sweden
8
Japan
7
UK
6
3
4
5
6
7
better health outcome
Infant Mortality Rate (per 1000 live births)
8
Measuring Health Systems Performance:
inputs, throughputs and outcomes
Revenues
/Inputs
• Redistribution
(Equity)
Health Services
Throughputs
• Allocative
Efficiency
• Administrative
Efficiency
• Risk-pooling/
Insurance
• Technical
efficiency
• Efficacy/
Effectiveness
Health
Outcomes
• Aggregate
• Disease
specific
• Socioeconomic
factors
Critical performance indicators needed at all levels
Complex Nature of Health Care
System
Transformation of Health Care
from a “cottage industry” comprising
individual practitioners
to a highly professionalized and
technologically intensive service “industry”
with rapidly evolving production and
technological frontiers
Health care “production”
process...
Multiple input factors
Complex production process
Complex production settings
Complex interaction with the
environment
Complex definition of products,
outcomes and benefits
Challenges to measuring health
system performance
Many areas of uncertainty in
productivity due to:
Lack of data
Lack of consistent and comparable data
Difficulty in relating financial inputs with
production outputs and health outcomes
Difficulty in adjusting for quality, external
factors
Challenges in measuring
productivity in health care:
Establishing common standards and
definitions for: “Products”, Production
processes
Relating these to Cost, Quality and
Cost-effectiveness
What measurement tools are available?
Structure and Context of Health Care
“Production” System..
Health
Outcomes
(e.g. QALYs)
Health Care
Production
Setting
Health Care
Public
Health
Programs,
Health
Promotion
Services
managed
care,
gatekeeping
functions,
continuity
of care,...
clinical practice
drugs, medical
technology, HRD
R&D,
Investments
SOCIO-ECONOMIC CONTEXT
Social
services,
Environmental
policies,
Other
intersectoral
programs
Structure and Context of Health Care
“Production” System..
Health
Outcomes
(e.g. QALYs)
Health Care
Production
Setting
Health Care
Services
managed
care,
gatekeeping
functions,
continuity
of care,...
Public
Health
Programs,
Health
Promotion
clinical practice
drugs, medical
technology, HRD
R&D,
Investments
SOCIO-ECONOMIC CONTEXT
Social
services,
Environmental
policies,
Other
intersectoral
programs
Standards and regulation of health
system inputs
Examples of Tools for
Regulation & Standards
Clinical procedures Clinical practice guidelines,
clinical pathways
Pharmaceuticals
Clinical trials, GMP, drug
registration, EDL
Medical devices
Medical device regulation (ISO);
technology assessment
Human resources Certification, Licensing, CME
Performance Measurement: Tools and
Instruments
Evidence-Based Medicine: Health
Technology Assessment
evaluating efficacy, cost-effectiveness &
appropriateness
assessment of multiple inputs
Potential value in defining a bundle of
effective health interventions (personal and
public health)
Still in early stages of development
Accounting for production process
U.S. Medicare
DRGS
106
Coronary
Bypass
with PTCA
107
Coronary
Bypass with
cardiac
catheterization
108
Other cardio
thoracic
procedures
109
Coronary
Bypass
without cardiac
Catheterization
Australian DRGs
(Version 4.1)
F05A
F05B
F06A
F06B
Croatian PPTP
Coronary Bypass with
Invasive Cardiac Investig.
Procedure with catastrophic
1
CC /
Coronary Bypass with
Invasive Cardiac Investig.
Procedure without
Catastrophic CC
Coronary Bypass without
Invasive Cardiac Investig.
Procedure with Catastrophic
or Severe CC
Coronary Bypass without
Invasive Cardiac Investig.
Procedure without
Catastrophic or Severe CC
Note: 1. CC = complicating conditions.
Source: Croatia Health Finance Study, 2003, The World Bank
Coronary
Bypass Surgery
Planning & Decisions
Assessment
Cycle of Medical Technology Assessment, Planning & Implementation
HEALTH TECHNOLOGY
ASSESSMENT
- Identification of priorities
- Testing and analysis
- Synthesis
- Dissemination
POLICY ANALYSIS
- Service Coverage
- Planning (# & distribution)
- Regulatory systems
- Standards and Guidelines
- Educational Policies
- Ethical standards
Database-Building
for Regulation,
Technology
Assessment
Policy, Planning &
Management Decisions
Investment
planning
Standards
& Protocols
Education
Policy
Evaluation of drugs,
devices, procedures
& delivery systems
Registration,
licensing
Quality Assurance
& Risk
Management
Implementation
Health
Professionals
Health facilities
Pharmaceuticals
Third-Party
Payers
Medical
Devices
Planning,
Needs
assessment
Safety, Efficacy,
CostEffectiveness
Manufacturers
Acquisition
Incoming
Inspection
Inventory &
Documentation
Commissioning
& Acceptance
Monitoring Use &
Performance
Life Cycle Management
Maintenance
Decommissioning
Health
Service
Outcomes
Structure and Context of Health Care
“Production” System..
Health
Outcomes
(e.g. QALYs)
Health Care
Production
Setting
Health Care
Public
Health
Programs,
Health
Promotion
Services
managed
care,
gatekeeping
functions,
continuity
of care,...
clinical practice
drugs, medical
technology, HRD
R&D,
Investments
SOCIO-ECONOMIC CONTEXT
Social
services,
Environmental
policies,
Other
intersectoral
programs
Variety of production categories
and settings
Categories of personal care
Acute care
Intensive care
Rehabilitative care
Palliative care
Outpatient (specialist) clinical care
Primary care (general practice)
How to bundle production processes?
Evaluating productivity under
different health care organizational
settings
Mixed results on the impact of organizational
reforms in US in the 1990s:
Vertical and horizontal integration
Non-profit vs for-profit
European experience:
“Internal markets”, separation of provider/payer
functions
Decentralization & corporatization
Structure and Context of Health Care
“Production” System..
Health
Outcomes
(e.g. QALYs)
Health Care
Production
Setting
Health Care
FLOW
clinical practice
OF
drugs, medical
technology, HRD
FUNDS
Services
managed
care,
gatekeeping
functions,
continuity
of care,...
Public
Health
Programs,
Health
Promotion
R&D,
Investments
SOCIO-ECONOMIC CONTEXT
Social
services,
Environmental
policies,
Other
intersectoral
programs
Relating production to financing
and costs
System of Health Accounts offers:
Comprehensive and consistent definition of “core”
health care activities, boundaries
International classification on sources and uses of
health resources
Comparable description of the flow of funds from
sources to uses
Is it sufficient to describe financial flows for
productivity measures?
Health System Performance
Evaluation Process
Analysis of
Outputs, outcomes
and Expenditures
Utilization and
Quality Reviews
Provider level
Clinical and
epidemiological
outcomes
Population
groups
Measuring Health Systems Performance
Revenues
/Inputs
• Redistribution
(Equity)
• Administrative
Efficiency
• Risk-pooling/
Insurance
Health Services
Throughputs
• Allocative
Efficiency
• Technical
efficiency
• Efficacy/
Effectiveness
Health
Outcomes
• Aggregate
• Disease
specific
• Socioeconomic
factors
A comprehensive Health Management
Information System needed to track critical
performance indicators at all levels
Structure of an integrated health
management information system
Insurer/payer
Claims processing
Utilization &
quality reviews
Health policy,
strategic planning,
regulation
Health Care
Management:
daily operational
support
patients
heath
data
common data & functions
resources
Clinical venues
activities
Patients, public
classifications
Public health
Reporting,
surveillance,
statistics
authorisations
Source: Adapted from Leo P. Vollebregt, EHTEL
Life-time patient
record, analyses
Public information,
education, etc.
European e-Health Initiatives:
Potential Applications
Public health statistics, reporting &
surveillance
Beneficiary management for insurers/payers
Eligibility checking, claims processing, utilization &
quality reviews/ medical audits
Health care management
Health policy, management and planning
Patient Lifetime Health Records
Opportunities created by EU
Integration
E-Europe 2005 objectives
European Wide e-Health Insurance Card
Regional Health Information Networks
(broadband) connecting all Health Actors
Online Health Services : e-Health Record, teleconsultation, e-medication, e-reimbursement
(across national borders)
Introduction of Health Information Clearinghouse
concept: public or private entity that facilitates
processing of nonstandard health data into standard
data elements
Information standards motivated
by EU e-Health initiatives
HISA Health Information Systems Architecture
CEN – TC251 European Standards Centre
Specific Middleware Architecture open to all
kinds of standards: HL7, IP, XML, Java
Effective strategy for dealing with Legacy
Health Systems
Standard categories and definitions
EU regulation on patient confidentiality,
privacy, security
Impact of EU Integration and
Expansion...
Need for common information
standards for health insurers/
purchasing agencies
Need for transparency, comparability on
quality of care, cost structures
Need for security, privacy, patient
confidentiality
Impact of EU Integration and
Expansion...
Potential consolidation of providers and
insurers seeking:
Economies of scale and scope
Lower cost structures
Higher quality
Impact of EU Integration and
Expansion...
Movement of goods, services and
people across borders
Pharmaceuticals and medical devices
Health professionals
Harmonization of regulation
Research and Development
Look for lessons from US Health
Insurance Portability and Accountability
Act (HIPAA), 1996
To improve portability & continuity of
health insurance coverage in group &
individual markets
All entities covered by CMS (formerly
HCFA) must be in compliance with
electronic transactions and code sets
standards (by Oct 16, 2003)
Conclusion
Many positive developments in measurement
tools, but will require strategic coordination
among different domains to obtain
meaningful results in aggregate
Development of a comprehensive strategy for
health management information system is
critical
EU integration offers opportunities and
motivation for finding common standards,
strategies